LESSON 1: ECONOMIC PRINCIPLES
Economics - is the study of how to manage money and the financial
status of an individual, an enterprise, an organization, or a country.
Managing a household or an organization requires different skills
that will come handy in regular day-to-day transactions one may
have.
At the core of economics studies are concepts such as scarcity,
unlimited needs and wants, alternatives, choice, and foregone
benefits. In a more business-like scenario, is the economic aspect of
budgeting and financial management. Learning how to invest, how
to spend, and how to save money are other critical aspects of
economic understanding.
Classified into two branches, microeconomics and macroeconomics,
the principles and concepts apply similarly but different in scope.
Microeconomics
- only deals with individuals, households, and specific
companies.
Macroeconomics
- deals with the society as whole and its dynamic relationship
with the rest of the world
Economics seeks to answer the question of what, how, and for whom
a good or service is produced.
Economic activities
- begin with an individual, progressing to the small unit of
society, which is the household, on to the larger entities such
as companies, and the international communities.
At the core of any economic concern is an individual's wants and
needs.
- If existing resources can address every individual's needs and
wants, there is no need to study economics. However, just as these
needs and wants are infinite, most resources are finite and scarce.
Scarcity of resources leads one to explore the economics of things.
- It refers to the existence of limited resources that are not
enough to address unlimited human needs or demands.
Shortage - refers to a market occurrence whereby the demand is
more than the supply available at a given time.
Large scale activities - movements in the stock market, government
directives on poverty and health care, and multi-nation involvement
in trade
Properly allocating these resources according to a larger vision and
direction of individuals, households, companies, and international
communities becomes more critical. Satisfying the needs and wants
of various entities are the driving force of all economic activities and
eventually defines the prospective prosperity of individuals,
companies, and communities.
Simple activities commodities.
fluctuations in the market price of basic
The lessons of economics allow one to optimize the utilization of
these scarce and limited resources.
Critical and complex economic issues impact the lives of ordinary
people in the same way that they affect businesses.
Rationalization
- allows one to evaluate the value of the goods being obtained
based on the cost that must be expended for its exchange.
When an individual finally makes a purchase, it comes because of
carefully evaluating the intrinsic and extrinsic value of the good in
question, and only pays for it if it is worth its price.
Scarcity of resources evolves into the identification of alternatives
and a decision for trade-off.
The rational mind allows one to end up with a right decision after a
review of all available possibilities.
When money is spent on a particular product over other possible and
equally valuable alternatives, a choice is made.
Opportunity Cost
- The loss from setting aside the value of pursuing other
alternatives with the same amount.
It is normal for individuals to compare varying alternatives. looking
at their quantifiable and non-quantifiable values, assessing possible
losses and gains, and evaluating available options before a choice is
made. As there are no perfect choices, just as information is not one
hundred percent obtained, every choice has positive and negative
consequences.
Free Resources
- are not actually resources that can be obtained and used
without costs.
Costs
- in economics can be either intrinsic or extrinsic, that is, a
cost with no actual cash outlay or a cost with identified cash
effect.
There is a need to identify assumptions in order to simplify the
complexity of economic issues.
Human needs and wants
- when not satisfied, results to a feeling of inadequacy or
distress.
- involve other noneconomic factors such as political,
emotional, social, technological, emotional, and even legal
Food is a requirement to survive
Shelter is something necessary for protection against unpredictable
natural elements.
Human beings have needs and wants that are either primary or
secondary.
Primary needs
- are those that are essential for one's survival, these are
resources that an individual cannot live without. .
Secondary needs
are those that are directly associated with one's happiness, or
a person's elevated status insociety.
- What we refer to as wants
Goods and services are created with fixed and variable inputs.
Fixed inputs
- present in short-run production.
- can only be useful until its maximum output
All inputs can be made variable in a long-run production period.
Utility
is the degree of satisfaction derived from the consumption
of a good or service.
When satisfaction is gained from any of the economic activities,
other principles come into play.
Principle of reduced usefulness or diminishing marginal utility
- the continued use of the same amount of product over a
period of time.
- It is no longer rational to continue the use and spending for a
product when its degree of usefulness or utility has been
maximized, or saturation point has been reached.
Producers should be aware of the principle of diminishing marginal
returns.
Diminishing returns
- happen When the consumption of a product is lower than the
amount of energy spent on it,.
- In the same way, while buying something, you evaluate the
utility derived from it with each unit and the cost you are
paying for it. In the beginning, the benefits are higher than
the value, but gradually, they decrease with continuous
consumption. This law is very useful in our daily life.
Economic activities
- refer to production, distribution, and consumption of goods
and services.
- goods are classified as to either tangible or intangible.
● Tangible are goods with physical identity
● Intangible refers to services.
-
human needs and wants are identified as the fundamental cause of
any economic activity
Varying individual resources, priorities, situations, motivations,
preferences, and level of satisfaction dictate the multiple ways by
which needs and wants are met.
Economic resource
a means by which an individual's needs and wants may be
directly or indirectly satisfied. For example, a cup of rice is
an economic resource as it provides the food requirement of
an individual, just as a rice plantation is an economic
resource because it provides the rice requirement of a
community or a company.
A teacher is an economic resource for those with teaching
and learning needs
- lawyer is an economic resource for those requiring legal
services.
There are many different examples of economic resources that can be
found in everyday settings, and these resources differ in category
depending on the nature or level of scarcity, form, or renewability.
Various types of goods become the object of multiple economic
activities that aim to satisfy different needs and wants. The question
is whether these goods satisfy needs and wants in a direct or indirect
manner.
movement of both goods and services in a production,
consumption, and distribution process to satisfy human
needs and wants.
the magnitude, type, and extent of resource involvement
differ in every economic activity
Consumption Goods
- Goods that directly satisfy human needs and wants. Example
would be a cup of rice in a restaurant menu.
All economic activities are motivated by either directly or indirectly
satisfying human needs and motivations This is the reason why
Capital goods
- are those goods that indirectly satisfy human needs and
wants. Example would be gasoline, which is needed to fuel a
car to be able to provide a means of transport.
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●
Depending on how it was used, the same resource can be classified
both as consumption and capital goods. The distinction lies on how
the good was used and not on its inherent character. A cup of rice can
be categorized as consumption good when it is purchased and
consumed as it is. It becomes a capital good when it is used as an
ingredient to create another food product or obtained for a different
purpose such as producing a rice wine.
●
Man-made or Capital resources - are those goods that
were produced by men from combining natural resources
and were created for an identified purpose.
Human resources - come in the form of labor services such
as a doctor, a writer, or a fisherman.
Economic resources
are either scarce or free based on nature or level of scarcity,
Scarcity
is relative to areas or situations
From the simplest way of performing household budgeting to
altering a nation's trade direction, knowledge of economics provides a
huge leverage for an individual, the concepts of scarcity, choices
among alternatives and of trade-off, distinguishing between the
classifications of economics resources, and contrasting the various
types of goods, connecting these concepts to day-to-day activities
will become easier to appreciate
Scarce
need for it exceeds the available quantity.
As one moves up to decision-making levels, such as when making
investments, returns and profitability are major considerations.
Free resources
- happen when the available resources exceed the current need
for it.
As to renewability,resources are either
● Renewable resources such as watersheds and forests are
regenerative and sustainable although this can usually
happen only over a long period of time.
● Nonrenewable economic resources such as coal, minerals,
and gas are exhaustive and only exist in limited quantities.
Knowledge of economics allows one to evaluate available options
and the risks that are associated with every possible alternative.
Meanwhile, consumption of these resources grows exponentially
leading to more insufficiency of its quantity to satisfy the long- term
requirements of the society.
Resources can also be classified according to their physical form:
● Natural resources - What exists in nature such as land and
bodies of water
●
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Huge losses can be minimized
Possibility of gains can be maximized
This knowledge to evaluate alternatives in order to arrive at an
informed choice is a result of a good knowledge of economics. One
must be able to determine the different choices whether one wants to
invest in a fixed deposit, lend someone at an interest, or purchase
properties while simultaneously being aware of the risks involved in
such alternatives and choices.
And while it is true that the exact future cannot be predicted,
anticipating and preparing for possibilities are possible through the
knowledge of economics. For instance, economists can speculate the
future value of goods traded in the stock, currency and futures
market, predict inflation rates based on historical figures, or
determine budgetary shortfall according to current economic figures.
Economics
- allows one to know the socio- economic issues that happen
on a regular basis.
- explains the causes and effects of poverty, unemployment,
income inequality, gross domestic production and gross
national product, inflation and deflation, peso exchange
rates, low economic growth, or trade deficits and the ways
by which they can be addressed.
- presents alternatives and choices for better decisions from
satisfying needs and wants, to company-affecting decisions
that are being made and from the individual perspectives of
to national and international society-altering directions,
economics
LESSON 2:
HUMAN RESOURCES MANAGEMENT (PERSONNEL
MANAGEMENT)
- involves the monitoring of the culture of the organization
- responsible for the recruitment of appropriate workforce, in
the recommendation of market-based compensation and
benefits that are in accordance with the company's current
and potential resources and in the crafting of an overall
strategic employee development plan
- management function that conducts research and makes
policies and recommendations which are implemented to
benefit, attract, and retain the best employees.
- emphasizes accountability in the design of structures and
systems that involves people and resources
●
HRM covers five functional areas: organizational design;
staffing; rewards, benefits, and compensation system;
training and development; and performance management and
appraisal system.
ORGANIZATIONAL DESIGN
- is about ensuring that there is an employee-job fit for all the
positions in an organization to fulfill its mission.
- done through the corollary functions of planning and job
analysis.
STAFFING
- comes after job analysis and human resource planning
- deals with the recruitment of individuals whose skills,
abilities, knowledge, and experiences are deemed
appropriate for the jobs in the organization that needs to be
filled.
- Corollary functions to staffing are recruitment and selection.
- includes recruitment, selection placement, and orientation
REWARDS, BENEFITS AND COMPENSATION SYSTEM
- includes compliance, rewards based on job evaluation, and
direct and indirect employee benefits and compensation.
- Its compliance component includes the legal aspects of
human resource management.
- This process involves wage and salary administration,
providing incentive and fringe benefits schemes as well as
social security insurance and creation of retirement funds.
EMPLOYEE AND ORGANIZATIONAL TRAINING AND
DEVELOPMENT
are the process of creating avenues for employee
improvement, reskilling and up-skilling for managerial
development, career planning. and transfer or promotion.
- seek to ensure that employees have the necessary knowledge
and skills that will allow them to satisfactorily perform their
jobs and steer the company toward its advancement in its
sector.
supervision that is expected to be given or received, as well
as working conditions and possible risks.
PERFORMANCE MANAGEMENT AND APPRAISAL
- defines the direction and movements of the careers of people
in the organization.
- This systematic assessment of an individual's job
performance and their potential for advancement results in
further training, coaching, or correction as needed.
- The result of performance appraisal may be promotion,
transfer, or retention. An extreme case would be demotion,
or separation, other than retirement or resignation.
- uses performance evaluation tools developed or adopted by
the organization to help identify interventions to enhance
work efficiency.
●
The core of human resource management is the attraction,
placing, rewarding, training, and retention of the right people
according to the objectives of the organization.
JOB ANALYSIS
- outlines the human resource management plan.
- is the process of collecting and studying various factors that
are related to the operation and responsibilities of a specific
job.
- Its immediate products are job description and job
specification
required in human resource planning, recruitment and
selection, training and development, job evaluation and
performance appraisal, the creation of a compensation and
rewards system, and the establishment of health and safety
policies.
JOB DESCRIPTION
- contains the job title, location, summary of duties, machines
tools, equipment needed to perform the job, and materials
and forms that will be used to perform the job, including the
JOB SPECIFICATION
- contains the statement of manpower qualification for a
specific job.
- this includes the required minimum education, experience,
training, judgment, initiative, physical effort, skills,
responsibilities, communication level, and emotional and
social characteristics
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●
Designing organizational structures also considers efficient
work process and dynamics. This being said, due
consideration is given not only to the daily processes but
more so to the organization's priority areas that are more
often accomplished over a longer period.
Understanding the efficiency of all systems and programs
marks the beginning of the analysis on how to better improve
results and outcomes.
PLANNING
- pertains to formulating strategies of personnel programs
ahead of use and will contribute to overall organizational
goals.
ORGANIZING
- is an essential process of allocation of tasks amongst
members of a specific structure with identified relationships,
responsibilities, and accountabilities within an integrated
activity toward the achievement of a common goal.
DIRECTING
- is a function that allows for the activation of people at
various levels of skills and tasks, and ensures that each one is
able to maximize his or her contribution to organizational
goals
CONTROLLING
-
comes after planning, organizing, and directing, and
necessitates the review of the employees' actual
performance.
includes verifying deviations and comparing results from
identified plans, and offering corrective actions for
improvement.
-
●
Business experts suggest that to be able to predict
organizational success is to ensure that the right people are
placed in the right position in the company's functional
process. This process of structural assessment and re-design
involves the referencing of existing employees and carefully
examining if they perform roles that are based on their
ability and expertise.
RECRUITMENT
- is the process of searching for prospective employees and
providing an encouraging environment for them to pursue
their job application in the organization.
- may be both internal and external to the organization.
INTERNAL RECRUITMENT
- can be in any of the following forms such as promotion,
transfer, job posting, or employee referrals.
EXTERNAL RECRUITMENT
- can be in the form of advertisement, through direct
recruitment, via employment exchanges using employment
agencies, networking with professional associations, campus
recruitment, or even word of mouth announcements.
SELECTION
- is the process of determining the qualifications, knowledge,
skills aude, experiences, and values of an applicant with the
purpose of ascertaining job suitability.
involves screening of applicants, having applicants take tests
or other methods of screening and shortlisting such as
interviews, reference and background verification, medical
job candidates include aptitude test, psychomotor least job
knowledge test, vocational or interest test, personality test
and group discussion participation test.
Interview types, on the other hand, can be informal, formal
planned, pattemed, nondirective, in-depth, stress, group, or
panel. It is normal that the applicant's fit to the company
culture is considered at this point.
PLACEMENT
- is the process of giving the selected candidate the most
suitable job in terms of the organizational requirement and
the prospective employees qualifications after the formalities
of screening. This phase of matching then leads to eventual
orientation.
COMPENSATION
- is a direct reward for the work done, benefits emanate from a
defined company incentive program.
BENEFITS
- are indirect payments for working beyond what a job
requires.
TRAINING
- is the imparting of technical and operational skills that are
needed for the current job.
DEVELOPMENT
- is the process of conducting suitable programs to improve
one's human and managerial capability to handle a more
expansive role in the organization.
●
●
●
●
Provisions for training and development of employees
should be embedded in corporate policies as a way of
cementing information on how the company puts a premium
on professional development.
Having the right organizational climate is an emphasis in the
task of human resource management, a climate that
celebrates and rewards the advancement of people in their
education, exposure, and training because these steps
ultimately contribute to a happier work force and a more
efficient organization.
Training and development exercises solidify teamwork and
promote team spirit among organizational members. They
also provide excellent growth opportunities for people who
have the big potential to move up in the organizational
ladder through diligence and commitment.
Having a good training and development program improves
organizational productivity, affects society and economy,
reduces costs, maximizes scarce resources, and improves
profits and overall work conditions of people.
SUCCESSFUL ORGANIZATIONAL DESIGN
- is one that maximizes profits, reduces costs, increases
employee and consumer satisfaction, and provides workflow
efficiency.
Lesson 04: Marketing Management Basics
A good understanding of market segmentation, consumer
behavior, innovation, and the variables in the marketing mix is
necessary in effectively developing a marketing management
system.
Marketing management - is the entire process of product
creation, promotion, selling, delivery, and continuous
development. Within these processes are created goods,
services, experiences, events, persons, places, properties,
organizations, information, and ideas to satisfy different types
of customers and various entities.
Market- is any individual, organization, or group, which has
an existing or potential transaction or exchange, beginning with
a customer and ending with another customer.
Core of Marketing Activities- is the creation and delivery of
superior customer value in the form of a manufactured product
or in the provision of a service.
Various marketing concepts intertwine
marketing management process.
within
the
● Production concept of marketing - holds that
customers are inclined to choose products, which are
available and are affordable. Hence, marketing
management efforts should concentrate on efficient
production and distribution activities.
● product concept of marketing- holds that customers
are inclined to choose products that provide the best
quality, performance, and features. Hence, marketing
management efforts should be devoted to continuous
product improvement
● ·Selling concept of marketing - puts importance on the
sales efforts that must be exercised for customers to buy
the product or service. Hence, substantial marketing
management efforts should address selling and
promotions challenges, using aggressive tools to drive
up the sales of products and services.
● · profit concept of marketing- emphasizes that
profitability is the responsibility of marketing even if
the production and operations side determine the cost of
manufacturing products and rendering of service.
Hence, marketing management efforts are maximized at
making sure that the right product is brought to the right
people, at right time, with the right price, through the
right distribution channel, and using the right
promotion. Cost must be minimized at every level so
that profit is realized at every level and buyevery
function. Cost must be minimized at every level so that
profit is realized at every level and every function
● · modern marketing concept- puts the customer at the
center of any marketing effort, valuing his/her
satisfaction, unique needs and preferences, and
expectations. Hence, marketing management efforts
must be focused on creating the unique selling
proposition of the product or service to meet customer
requirements.
● ·social marketing concept- underscores the need for
marketing activities to support and ensure social
wellbeing. Hence, marketing management efforts must
concentrate in addressing societal concerns such as
pollution, scarcity, false advertising, cheap labor in
manufacturing places, and inflation.
In the strategic business analysis exercise, marketing
management strategies must be consistent with the
strategies of the other functional areas, and involve the
analysis, planning, implementation, and control of
programs, which are designed to bring about exchanges
for mutual gain. It is heavily dependent on the
adaptation, coordination, and integration of the
marketing variables of product, price, place,
promotion, and additionally for service customers are
people, physical evidence, and process.
❖ The scope of marketing management extends in the
planning, organizing, implementation and control of
product pricing, publicity, distribution, and after
sales service.
❖
Marketing management- also finds itself in the functions of:
❖ Its physical treatment function entails packaging,
standardization,
grading,
branding,
storage,
warehousing, and transportation
❖ and Its function of facilitation of exchange involves
advertising, pricing, financing, and insurance.
Ultimately, marketing management aims to pursue customer
conversion to arrest declining product demand, develop
markets against latent demand, remarket products and services
to overturn faltering demand, and maintain marketing foothold
in areas where full demand already exists.
The variables in the marketing mix continue to provide the
tools that can be used to achieve the goals of marketing
management.
1. First introduced by J. Culliton in 1948
2. Borden's coining of "marketing mix" in 1949
3. E.J. McCarthy's 4Ps of Marketing in 1960,
4. B. Booms and M. Bitner's 1981 addition of "people," the
different variables are put together according to the needs
of the firm and the situation of the market.
●
●
These variables are:
● Product- involves determining product features such as
size, color, materials, form, composition, packaging,
product line, and product purpose.These features are
altered according to the identified place of the product
in the product cycle of introduction, growth, maturity,
and decline.
● Price- is determined and played around based on
production cost, level of demand, degree of
competition, buyer behavior and market psychology
● Place- characteristics of the product itself, the buying
behavior of customers, and the financial resources of
both the buyer and the seller determine the place or
channel of distribution activities.
● Promotion- include situation about competitors,
differentiation in the extent of buyer awareness, and in
the depth of buyer involvement in the product. The task
of promotion is to persuade customers to act through
making a purchase that is based on any or a
●
➢
➢
➢
combination of personal selling, advertising. sales
promotion, point of purchase or product display, public
relations campaign, and publicity.
People- in service marketing account for the skills and
personality of people involved in the marketing process,
and whether these skills and personality can impact
customer relationships and promote customer loyalty
Process- in service marketing management considers
cost efficiency in logistics, delivery, and schedule as
well as the kind of experience from the service
obtained.
Physical Evidence- includes packaging and design for
differentiation, information, and adding value to the
service and its corollary products.
A clear marketing management plan will provide
necessary inputs in the areas of competitor activities,
economic situation, developments in technology,
socio-cultural factors, political factors, government and
legal factors, and factors in the global milieu for an
informed strategy formulation exercise.
Customers are value-maximizing entities who form an
expectation of value and eventually act on it. They will
buy from the firm whom they perceive to offer the best
customer value, which is the difference between total
customer value and total customer cost. A buyer's
satisfaction is a function of the product's perceived
performance and the buyer's expectations.
Recognizing that high satisfaction leads to high
customer loyalty, most companies would aim for total
customer satisfaction. For such companies, customer
satisfaction is both a goal and a marketing tool.
➢ The key to retaining customers is relationship
marketing. To keep customers happy, marketers can
add financial or social benefits to the products or
services, or create structural ties between the company
and its customers.
Quality- is the totality of features and characteristics of a
product or service that bears on its ability to satisfy stated or
implied needs.
Total quality is the key to value creation and customer
satisfaction. Marketing managers have two responsibilities in
quality-centered companies.
● First, they must participate in formulating strategies
and policies designed to help the company win through
total quality excellence. Second, they must deliver
marketing quality alongside production quality. Each
marketing activity. that is marketing research, sales
training, advertising, and customer service, must be
performed to the highest standard.
-end of lesson 4 by Mona Ganda
LESSON 5.
FINANCIAL MANAGEMENT BASICS
Financial Management
●
Covered in understanding the finance objectives of
maximizing profit and satisfying customer wants.
Other coverage:
- Investment Decision Process
- Developing Cash Flow
- Provision of data for the financing of new projects
- Capital Budgeting Techniques
- Traditional and discounted cash flow
- Determination of internal rate of returns
- Approaches for reconciliation under conditions of risk and
uncertainty
●
●
FM is a process which involves managing and controlling
finance-related activities of an organization, applying
management principles to the financial aspects of the
business operations that will ultimately result in increased
profitability.
It involves planning, organizing, directing, and controlling of
financial activities such as procurement and utilization of
funds of the enterprise.
Elements of Financial Management
1. Investment Decisions. Include investment in fixed assets,
also known as capital budgeting, or working capital
decisions.
2. Financial Decisions. Relate to the raising of funds from
various resources that are based on types of sources, period
of financing, cost of financing and returns from financed
projects.
3. Dividend Decision. Decisions on distribution of net profits
that are generally divided into dividend for shareholders and
retained earnings.
Maximization of Shareholder wealth - objective of Financial
Management
Financial Management Operated on the following areas:
- Cost Control
- Pricing
- Profit Forecasting
- Measuring of required return
- Managing Assets
- Managing Funds
Part of FM is the creation of a system for the movement of
cash flow between capital markets and the needs of the firm for its
operation. The cash that circulates in this movement from source to
user includes:
- Cash investment in firm’s operations to purchase real assets
- Cash that is reinvested to the firm’s operations
- Cash that is returned to investors
- Cash generated from the firm’s operation
- Cash raised from selling financial assets in financial markets
Role of Financial Manager
● Performs Financing Decision
● Performs investment decision
● Forecasts and plans the firm’s financial needs
● Deals with financial markets
● Manages Risks
Financial Planning
● is the process of estimating the capital required and
determining its competition. It is also the process of framing
financial policies in relation to procurement, investment, and
administration of funds of an enterprise.
Purposes of Financial Planning:
- Determine capital requirements depending upon factors such
as current and fixed assets, promotional expenses, and
long-range planning that has either a short-term or a
long-term requirement.
- Determine capital structure that is dependent on the kind and
proportion of capital required in the business and includes
decisions on debt-to-equity ratio in both the short- and
long-term business operation.
- Frame financial policies with regard to cash control, lending,
and borrowings.
- Ensure that financial management tasks would result in the
maximization of scarce financial resources.
Sound Financial Planning ensures that the funds are adequate, that
there is a reasonable balance between outflow and inflow of funds so
that stability is maintained, that the suppliers of funds are easily
investing to grow and expand the organization, that uncertainties are
reduced with regard to changing market trends, thus helping in the
organization's long-term stability and profitability.
Proprietorship. Is an unincorporated business that is owned by a
single individual, has advantages, the inherent ease of organization,
its inexpensive operation, having less government regulations, and
having lower taxes applied to it.Disadvantage, unlimited personal
liability, limited business life, and difficulty to raise capital.
Partnership. Operates within the same realm of advantages and
disadvantages as a proprietorship type business, with the number of
ownerships as the only
difference between them.
Corporations. Have more flexibility that can be provided for
business expansion, and a robust financial management system can
be beneficial with its nature of limited liability, ease in raising capital
and transferring ownership, as well as having unlimited business life.
Prone to double taxation.
Financial records of transactions are maintained to easily reconcile
any gap and correct any oversight least they affect year-end reporting
and compliance requirements of the organization. Through proper
bookkeeping, a book of records is kept, updated, and monitored.
Two (2) major Reports
1. Income Statement or Profit or loss statement
2. Statement of Financial position or the Balance Sheet
Financial controls. In managing the finances of a business
organization, financial controls are developed and set in place to
ensure that funds are efficiently and effectively utilized.
A major cause of business failure is financial liquidity, or the lack
of funds.
Assets. Are valuable factors for organizational growth, and firms
must understand that acquiring assets require financial capacity.
Companies should make sure that they are able to maintain a sound
financial liquidity that guarantees their ability to pay off their
creditors, that they are able to compensate their investors, that they
have the capacity to spend for their regular operations, and that they
can cover for their maturing debt obligations.
The amount of total debt that is needed by a business should be
limited to the funds that can be provided by its equity owners in the
form of investments and retained earnings.
Net income. Depends on the amount of sales, cost of goods sold,
operating expenses, interest expenses, and taxes. The total sales
represent the gross income of the firm, with the net income arrived at
after costs, expenses and taxes have been deducted.
Working capital. Are the current assets, accounts receivable, and
inventory that are required in the daily operations of the firm and is
derived by deducting current liabilities from the current assets.
Liquidity. Is also known as the company's current ratio, and
determined by dividing the firm's current assets by its current
liabilities.
External equity. Which is the business owner's original investment,
as opposed to internal equity, which is capital from the retained
profits of the organization.
Financial Statements
● Accounting statements that serve as a form of financial
reports about the company's performance and resources
serve as tools to determine its financial requirements and
assess the financial implications of any strategic action.
Income Statement
●
Summarizes a firm's revenues and expenses over a given
period of time and reports the profit or loss from operation
over a specific period.
● Provides the profitability profile of a business organization
and helps possible creditor or potential investors to ascertain
the possible length of time that returns from their investment
can be expected.
Balance Sheet
● Or the statement of financial position provides a picture of a
firm's financial situation at a point in time, through its assets,
liabilities, and owners' equity.
Depreciation expense is a cost that is related to fixed assets whose
value diminishes at specific rate over a period and is actualized every
year.
Current assets or gross working capital are resources that can be
converted to cash within the firm's operating cycle and may be in the
form of cash, accounts receivable, and inventory.
Income tax is computed based on the business owner's income from
all sources, while corporations and partnerships are subject to a
corporate income tax.
Company's income is derived from its revenue (ie., sales) less the
expenses it incurred during the period.
Revenue is the sales from products sold and services rendered.
Expenses include the cost of producing the product or service,
including operating expenses such as marketing, selling,
administrative expenses and depreciation, and other financing costs
such as interests and taxes that were paid.
Cost of goods sold is the fee incurred in producing or acquiring the
goods and services that will be sold by the company, which when
deducted from sales should yield a gross profit.
Operating expenses. Cost that involves marketing and selling,
general and administrative expenses, and depreciation.
Earnings before interest and taxes (EBIT) are paid as operating
income, and this is derived by deducting total operating expenses,
depreciation, and amortization from sales.
Financing costs is the amount of interest expense owed to providers
of funds, normally creditors.
Net income is distributed to the owners or are put back and
reinvested to the company and is computed from the amount that was
invested in the previous year minus also the expenses and taxes due.
(COGS)
Sales or Revenue
Gross Profit
(Operating Expenses)
Operating Income
(Interest Expense)
Earnings before taxes
(Income Tax)
NET INCOME
Cash. Can be in the form of currencies, cash equivalents or
negotiable instruments, while accounts receivable is the amount of
credit that are extended to customer that is currently outstanding.
Current assets is the inventory in the form of raw materials or
finished products that are expected to be on sale.
Fixed assets or noncurrent assets. Are assets that are relatively
permanent in nature such as property, plant, building, or equipment,
and other intangible assets such as copyrights, patents, and goodwill.
Gross fixed assets. Original value of depreciable assets before any
depreciation expense is deducted.
Accumulated depreciation is the total expenses deducted over the
assets' life, which when deducted to gross fixed assets are known as
net fixed assets.
Liabilities or debts are business financing provided by its creditors
and may be current or short-term, or long-term in nature.
● Current debt. Otherwise known as short-term liabilities,
include accounts payable, accrued expenses, and short-term
notes.
○ Accounts payable are business credits payable to
suppliers.
○ Accrued expenses are short-term liabilities incurred
but not paid.
○ Short-term notes are cash amounts borrowed that
must be repaid within a short period of time.
● Long-term debts are loans that mature beyond a year, while
a mortgage is a type of loan that is guaranteed by a
collateral.
Equity is the net worth of a business, with owners' equity is the
money that the owner invests in the business.
Retained earnings are profits minus the dividends withdrawn from
the business.
Assets can be derived as:
CURRENT ASSETS + FIXED ASSETS + OTHER ASSETS = TOTAL
ASSETS
Debt and Equity can be derived as:
DEBT + OWNERSHIP EQUITY = TOTAL DEBT AND EQUITY
Financial report shows the movement of money as the business is
conducted.
Statement of cash flow shows the impact of a business' activities on
cash flow over a given period of time.
Cash is reflected as income when it is received and shown as an
expense when it is paid.
Different Activities of a business:
- operating activities or during the usual operation
- investment activities or related to the venture in or sale of
assets
- financing activities or related to funding the firm.
Cash flow is calculated by taking the sum of the operating income
and depreciation, while net working capital is the money invested in
current assets minus accounts payable and accruals.
After-tax cash flow from operation is the sum of net income,
depreciation expense, and interest expense.
Operating working capital is equal to the difference between
current assets minus accounts payable and accruals.
Financing activities are the fastest sources of increasing cash flow
in the business. Increases in cash flow may come from debt and
equity.
Ratios are important tools in financial management and are used to
compare financial data to yield information about the organization's
liquidity, solvency, profitability, and others.
Financial ratio analysis simplifies the financial management
requirement when large value summation and differences are present,
thus presenting with ease, the weaknesses and strengths of the
company for appropriate intervention when needed.
Liquidity ratio reflects the ability of the business to pay its debts
when they come due by converting its assets to cash.
-
Return on assets is the rate of return on the total assets
invested in a business.
ROA = Operating Profits/Total Assets
-
Two (2) of Liquidity ratio (Current and Quick)
Current Ratio
= Current Assets/Current Liabilities
Quick Ratio
= (Current Assets - Inventories)/Current liabilities
Return on equity is the rate of return earned by the
investment of the owner.
ROE = Net Profit/Owner’s Equity
Efficiency ratio or asset and debt management ratios. These
ratios determine the right mix between assets versus sales, and debt
against equity. It measures the performance of the business in terms
of utilizing its assets and liabilities in order to generate sales and earn
profits.
Solvency ratios.
Measure the long-term viability of a business and determine
the long-term risks in the interest of investors and stockholders.
Measure the level of debts of a company as compared to its
assets, annual earnings, or equity.
* Asset Turnover Ratio = Total Assets/ {(Beginning Assets +
Ending Assets)/2}
* Inventory Turnover Ratio = Net Sales/Inventory
Debt Ratio
= Total Debts/Total Assets
Market value ratio. Also called market prospect ratios. These ratios
help predict the possible amount of earnings in the investment.
Ratios commonly used in this category include earnings per share,
dividend yield, payout ratio, and others.
Profitability ratios reflect the company's profitability in relation to
its assets and measures the ability of a business to earn profit in
relation to its expenses. It also measure if the company is profitable
when compared to the previous periods or compared against its
competitors.
Profit Margin = Profits/Sales
Aside from profit margin the other profitability ratios that are
most utilized include:
* Earning per share = Net Income/Total Number of Outstanding
Share
* Dividend Yield = Total Dividend payments paid per year/Market
price of the stock
* Market Value Per Share = Total market value of the shares/Total
number of outstanding share
Limitations of Financial Ratios
-
comparison with competitors;
comparison in industry average; difference in accounting
methods of companies;
difference in operating methods of companies;
distortion in comparing ratio impact;
seasonal accounting periods; and
accuracy level of ratio estimates.
Factors can be considered in the evaluation of company financial
performance
- firm's sources of revenue
- its product and services
- the company's position in the industry
- the company's global outlook
- the firm's competitiveness, prospects, and new industry
regulations
Breakeven Analysis. A tool in determining product and company
acceptability through the volume or level at which a product will
generate enough revenue for the company to become profitable.
Breakeven point is the stage where the total sales revenue is equal
to the total costs, with total fixed costs, semi-variable costs, and
similar expenses is divided by the contribution margin, which is the
selling price minus unit costs and expenses.
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heightened concern on value creation;
innovation in financial instruments;
integrating human capital in the technical operations;
strategic foresight on new developments in the sector;
maintaining balance in the design of financial processes and
systems;
knowing emerging capital markets;
connecting with the financial community including investors
and regulators;
assessing of probable acquisitions, looking into initial
negotiations and
carrying out due diligence;
communicating with employees and investors about
horizontal integration;
dealing with post-merger integration;
dealing with new legislation affecting finance;
development of research reports that serves as a guide in
strategic
direction planning;
dealing with ethical standards as arbiter; and
maintaining a relevant presence amidst the dynamic financial
world.
Lesson 6
Introduction to Sustainability Management
Breakeven = Total Fixed Costs and Expenses/(Contribution Margin)
In the conduct of financial management, people in practice will
always be challenged in its functions that pertains to:
●
continuous focus on margins;
Sustatinability Management
- Business organizations stand to benefit from practicing
sustainability management
Sustainable development
-
Coined in 1987 by the United Nationsthe word sustainable
development describes an economic development that will
continue to meet the requirements of the present generation
without compromising the needs of future generations.
Sustainability
later expand its scope and meaning from simple works of
philanthropy to beyond compliance actions of business
organizations in the areas of environment, social, and
governance.
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Businesses continue to create wealth by continuously
meeting the economic needs of the society l, making people's
lives better through products and services, without
endangering the same resources that the generation of
tomorrow will need
Societies, ecosystems, and value-creating activities are
meant to thrive in a sustainable economic environment.
Individual business sustainability goals cannot exist in a
vacuum, and organizations must join hands to build
sustainable economic systems of production, distribution,
and consumption that are ideally felt in all levels of the
society.
This seemingly ambitious direction toward sustainability
includes:
● finding regenerative raw materials,
● creation of green business and eco-friendly
manufacturing,
● lifelong learning for a diverse and inclusive human
capital development,
● promotion of circular economy ethical financial
practice and
●
creative social engagement of companies
Sustainability
- the only guaranteed path for business organizations to exist
and for societies to flourish
Sustainability management
- sustainability management should not be confused with just
sustainable competitive advantage and sustained economic
growth, although these two objectives are acceptable
business goals.
- Sustainability in business is no longer exclusive of just
long-term profitability but now has the society's welfare at
its center and includes environmental protection and
business ethics and compliance.
- For this reason, concepts related to sustainability also
include more common terms such as corporate social
responsibility, environmental impact management,
shared value and the triple bottom line.
Corporate Social Responsibility (CSR)
- CSR emphasizes the corporation's ethical responsibilities to
shareholderscustomers, societies, and future generations
- This goal is pursued despite the obvious differences in the
decisions and actions taken by these sectors
- For some companies, responsibility is offering the minimum
wage to satisfy shareholders; for others, responsibility is
offering a higher living wage to satisfy employees.
- These decisions and actions, which at times can be
contradictory to one another or even legally conflicting, are
balanced with the primary responsibility to the owners of
wealth who are the shareholders, and the drivers of demand
who are the customers
Shared Value
- Companies argue that it is impossible to create shareholder
wealth while pursuing society's welfare.
- The key is to promote the sustained attainment of societal
value, that includes shareholder value, the value of the
shared natural environment and the common economic stage
where everyone is an actor.
- The biggest opportunities for creating shared value may
require a longer time to materialize and is not realistic for
those whose interest remains shortsighted and who only
plans in the short- term periodImmediate win-wins do not
suit a sustainability agenda as it does not consider the impact
of actions to the state of future generations
Triple Bottom Line
- Distinct from sustainability in terms of coverage, triple
bottom line considers the social environmental and the
financial performance of the business organization.
- This approach does not offer guidance on how to manage
those bottom lines or make difficult trade-offs but
emphasized the balance that must be attained in the three
areas of profitability, environment, and social contributions
of enterprises.
- The focus is on its meanings and not just on mere definition
since these concepts are often interchangeably used
Sustainability
- is important for business organizations because their future
lies in their shared contribution and collective impact to
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initiatives on the promotion of people welfare protection of
the planet and economic prosperity
requires a vision and a long-term actionIt is about future
generations and endless collaboration of key stakeholders of
industries
Beyond the more obvious economic value of sustainable
business management to the long-term prosperity of
enterprises, there are many other reasons why pursuing
sustainability is a smart business move. This includes:
● attracting and retaining employees who seek a more
purpose-driven life;
● developing more resilient supply chains;
● creating a more loyal customer base; and
● greater acceptance in the local communities where
they operate
Knowing-doing and Compliance-Competitive advantage Gap
- In looking at sustainability, the reality of knowing-doing and
compliance- competitive advantage gaps must be addressed.
Companies know the right thing to do but fail to do it.
Likewise, compliance takes secondary priority as they build
more on their competitive advantage.
- Indeed, only a holistic approach to sustainability can deliver
solid results.
- The integration of sustainability practices in all the facets of
business management functions of human resource
management, production and operations management,
marketing management, and financial management is the
only solution to bridge the gaps that were mentioned
Business sustainability
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not as simple as the normal business concepts such as costs,
revenues, profits, and markets.
It requires leaders to see themselves as part of a larger
ecosystem and not just confined to short-term business
purpose.
In recent years, businesses have begun shifting their
attention toward pursuing the seventeen agenda of the United
Nations Sustainable Development Goals (UN SDGs)
Short-term business insights have been converted to
creative ideas to incorporate business goals to issues that will
affect future generations such as climate change and
biodiversity. Companies are seeing the reality that a
business- as-usual thinking is no longer acceptable.
good examples that are worth following
- are the business cases of sustainability champions.
- In recent years, many start-up companies were created all
around the globe carrying the mission of responding to a
specific agenda in the 17 UN SDGS.
- Indeed, giving attention to sustainability has become
increasingly critical that even the Philippine Securities and
Exchange Commission (SEC) has already required the
submission of sustainability reports as part of company
annual performance reports.
● This compliance requirement will put emphasis on the muchneeded follow through that must be done on the corporate
level in order to make a dent in the attention and interest that
sustainability management must immediately receive.
Sustainability
is a business approach worth pursuing and business strategy
that will give a company its longevity and prosperity.
Lesson 7
Vertical Integration
The degree to which a company controls the manufacturing of its
inputs or suppliers as well as the distribution of its outputs or final
products is known as vertical integration. Firms consider the viability
of manufacturing i.e., backward integration, or distributing, i.e.,
forward integration, goods or services in-house or outsourcing them
to third parties. Both strategies are about gaining control of either the
firm's resource and materials supply or the distribution of its
products.
Forward Integration
- is a type of downstream vertical integration in which a company
owns or controls product distribution in the supply value chain.
-It broadens a manufacturer's operational reach to include product
sales and tightens its hold on market demand.
- It gives the firm better control over retail prices, allowing it to
adapt to demand fluctuations.
- A firm can feasibly adopt a forward integration strategy if it is
highly capable of managing its own supply chain and realizes cost
savings if external firms (middlemen) are cut off from the value
chain.
- are the lack of reputable distributors or retailers that can drive sales
targets and minimizing costs that can drive down prices.
- this entirely depends on the firm's adoption of a cost leadership
strategy.
Technology
- has also accelerated how firms deliver their products directly to the
consumer and effectively cut off the middleman.
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Franchising
- is another form of forward integration in which the firm
(franchisor) has a legal contract with another firm (franchisee) to
distribute or sell its products to customers. - this maximizes market
opportunities for the franchisor to expand its reach. Franchisors do
not own franchisees, but they exercise a large degree of control over
the former's operations. The franchisor develops the brand, conducts
large-scope marketing activities, develops standard operating
procedures and standards, manages the commissary or warehouse,
and provides logistical support in the supply chain to franchisees.
Franchisees
- are independent business entities that pay the franchisor or
franchise owner the right to carry the franchisor's brand and sell its
products.
- receive site selection and development support, operational
procedures training, marketing support, financing assistance, and a
steady supply of raw materials or finished products to sell.
- are not allowed to sell products other than the brand it carries.
- It also is obligated to follow strict standards on quality, delivery,
cleanliness, and brand image.
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Disadvantages of Forward Integration
This strategy is not always applicable, and its feasibility is in
question if it does not create a competitive advantage. Haphazard or
poor analysis of the value chain poses some disadvantages such as:
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Advantages of Forward Integration
This strategy is effective if it clearly creates a distinct competitive
advantage in the market. Some advantages are:
full control over downstream activities;
elimination of the middleman significantly reduces
applicable costs in the value chain such as market transaction
expenses,
distribution and delivery, and warehousing;
differentiated products increase their branding image
because the firm can control and provide a unique customer
experience;
it may create higher barriers to entry if the firm is financially
capable to sustain this strategy; and
it may take advantage of a country's lower tax rates, labor
costs, and material prices.
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mismanagement and poor control will not deliver the
expected value of the strategy;
significant capital outlay or costly to sustain a
company-owned distribution arm compared to external or
third-party entities;
the firm may not realize expected synergies because of poor
communication; and
lack of expertise or talent, culture differences, or the strategy
does not fit the business model or overall direction of the
firm.
Backward Integration
Differentiation
- is a type of vertical integration where a firm buys or takes control
of another firm that provides the materials or services required for its
finished goods.
- this strategy is used to reduce production costs, increase
efficiencies in the supply chain, create barriers to entry of new
entrants, and overall, to achieve a competitive advantage in the
market.
- that can gain access to the resources and activities in the supply
chain give them the ability to customize their products, meet
customer demands, and differentiate themselves in the market.
Advantages of Backward Integration
Secure material supply.
- it ensures access to an appropriate supply volume, when needed
without having to worry about raw materials being sold to
competitors or suppliers failing to produce or manufacture
Quality control
- Strategic ownership of any or all activities in the supply chain
allows the firm to innovate, reduce inefficiencies and increase quality
in raw materials, goods in process, and final goods.
- It is easier to exercise control in the final output if there are fewer
external stakeholders involved in the supply chain.
Cost efficiency
- Eliminates the costs incurred by external suppliers, distributors,
and middlemen in the supply chain.
Creates barriers to entry
- A firm that can control the supply and price of raw materials used
by its competitors can effectively discourage new entrants from
entering the market. In some cases, ownership of exclusive patents,
intellectual property, and proprietary technology used in production
materials creates a competitive advantage for the firm.
Disadvantages of Backward Integration
Substantial investments. Acquisition, mergers, or gaining
control over a manufacturer requires huge investments. Taking out a
loan to finance an acquisition is not advisable if the firm is already
highly leveraged.
- risks of internal financing may also burden the firm by burning
through its cash flow and reserves
- should carefully plan their decision to adopt backward integration
because the result may not justify the returns in the long run.
Failure to achieve economies of scale. Taking control or
ownership of a substantial portion of the supply chain does not
automatically drive down costs.
- Hard numbers and projections should always justify the acquisition
or merger with another firm.
● Will partial ownership give the firm substantial control?
● Will full ownership justify strategic goals such as market
control, price, differentiation, and increase barriers to entry?
Lack of competencies.
The firm may not have the competencies to effectively manage the
business activities of a raw materials supplier or manufacturer.
-Inefficiencies in the left side of the supply chain such as sourcing,
procurement, logistics, and other relevant activities may prove
disastrous in the overall strategic goal of the firm.
- Acquisition of another firm should always reflect visible and
positive results all throughout the supply chain. - strategic move
should contribute the expected value and create a competitive edge in
the market.
- If the results are not significantly visible, the firm should reconsider
its position to achieve its strategic goals.
CHAPTER 2: LESSON 2
Strategic Management Model
- emphasizes the value and process of
internal and external evaluation before
strategies
are
formulated
and
implemented.
- It emphasizes the strategic management
design that begins with the exploration
of an organization's vision and mission
and examining its values and principles.
Developing the strategic management model
is important because it provides the
basic framework for understanding how
strategic
management
can
be
operationalized at the company level.
provides managers and strategists a
greater comprehension of the iterative
approach in conducting real strategic
management in the organizational
setting.
The strategic management model
begins with the development of the
organization's mission and vision, which
can be translated to organizational goals.
These elements show the direction and
the areas of concern to be attained by an
organization.
- Once these elements have been
determined, the role of the manager or
strategist is to perform an analysis of
the organization. This involves the
major types of analysis, external
analysis of the environment, internal
analysis of the organization, and
industry analysis. Each of these analyses
will provide information on strengths
and weaknesses and opportunities and
threats. The results of these analyses
could help managers and strategists to
match the niche areas to be focused,
identify distinctive competence of the
organization, and determine
company's competitive position.
the
Strategic management
- is the art and science of formulating,
implementing,
and
evaluating
cross-functional decisions that enable an
organization to achieve its objectives.
- is also the process of developing a game
plan to guide a company as it strives to
accomplish its vision, mission, goals,
and objectives and to keep it from
straying off course. It gives business
owners a blueprint for matching their
companies' strengths and weaknesses to
the opportunities and threats in the
environment.
Identifying the Competitive Advantage
- The goal of developing a strategic plan
is to create a competitive advantage for
the company
Competitive Advantage
- which is the aggregation of factors that
sets a small business apart from its
competitors and gives it a unique
position in the market.
- Every firm must establish a way to
create a distinct image in the minds of
its potential customers. There is no
business that can be anything or
everything to everyone.
- One of the biggest mistakes many
entrepreneurs do is not be able to
differentiate their companies from their
competitors.
Strategic management
- can increase a company's effectiveness,
but owners first must have a procedure
designed to meet their needs and their
businesses unique characteristics.
-
It is a mistake to attempt to apply a big
business
strategic
development
techniques to a small business because it
is not right for the business itself. They
should look for an appropriate strategic
management fit for the company itself
and its financial resources.
The strategic management should include the
following features:
● Use a relatively short planning horizon
fit for small companies.
● Be informal and not overly structured.
the
participation
of
● Encourage
employees and external parties to
discuss the improvement, reliability, and
creativity of the resulting plan.
● Focus on the needs and wants of
customers.
● Do not begin with setting objectives
ahead of time because it might interfere
with the creative process of strategic
management.
● Focus on strategic thinking, not just
planning, by joining long-range goals to
daily operations.
● Strategic thinking encourages creativity,
innovation, and employer participation
in the entire process.
4) Scan the environment for significant
opportunities and threats facing the business.
5) Identify the key factors for success in the
business.
6) Analyze the competition.
7) Create company goals and objectives.
8) Formulate strategic options and select the
appropriate strategies.
9) Translate strategic plans into action plans.
10) Establish accurate controls.
The Strategic Management Process
Strategic planning is not just a result or product
of an outcome, but this is an ongoing process.
The strategic management process consists of
ten steps.
1) Develop a clear vision and change it into a
meaningful mission statement.
2) Define the firm's core competencies and
target market segment and position the business
to compete effectively.
3) Assess the company's strength and
weaknesses.
Benefits of Strategic Planning
Strategic planning
- is the methodological form of planning
and therefore it is simple to grasp the
methods, procedures, and rituals
programmed
to
implement
the
strategies.
❖ provides a structured way to analyze
and think about complex strategic
problems, requiring management to
question and challenge what they take
for granted. Strategic planning can be
used to involve people in strategy
development. Strategic planning is an
effective way to communicate the aim of
management to members of the
organization.
❖ can be used as a means of control by
regularly reviewing performance and
progress against agreed objectives.
Drawbacks of Strategic Planning
Besides several advantages, strategic planning
has the following pitfalls:
● Strategic planning is difficult and time
consuming.
● In strategic planning, immediate results
are rarely obtained.
● Strategic planning, quite often, limits the
organization and executives to the more
rational and risk-free options.
Strategic planning - is a process that brings life
to the mission and vision of the enterprise.
A well-crafted strategic plan - is determined
from the top down and considers the internal and
external environment around the business. It is
the work of the managers of the business and is
communicated to all the business stakeholders,
both internal and external to the company.
Following are the lessons that can be learned
from the exercise:
➔ Preconceived ideas hurt process. We
often have preconceived ideas that may
in fact, be irrelevant to the true business
goal. Similarly, putting together all of
the pieces is more important than your
preconceived notion of aesthetics. It is
important to get these mental maps on
the table during the planning stage.
➔ Ignoring key expertise. Often, people in
organizations who can contribute
expertise or experience get overlooked
because they have not traditionally
played a role in strategy development.
They may hold the missing piece to a
winning strategy.
➔ Time horizons. Inevitably, people on the
front lines (e.g., operations) have a very
different view than the long-view people
(e.g., managers and strategists). Firms
need both perspectives in strategic
management.
➔ More than one way. There is often more
than one way to achieve a goal. Firms
get caught up in picking the perfect
strategy when less elegant strategies are
quite effective (e.g., dog's head on
elephant's body).
Chapter Summary
Strategy
- is the long-term goals and objectives of
an enterprise and the adoption of the
courses of action and the allocation of
resources necessary for carrying out
these goals.
- It is management's game plan for
strengthening
the
organization's
position, pleasing customers, and
achieving performance targets. It can be
formulated on three different levels,
corporate unit, business unit, and
functional or departmental unit.
Strategy management
- explores the organization's mission and
vision, examines principles, techniques,
and models of organizational and
environmental analysis, and discuss the
theory and practice of strategy
formulation
and
implementation
including corporate governance and
business ethics toward effective strategic
leadership.
Strategic management
- is the procedure where an organization
sets goals and objectives and starts
planning and implementing the planning
which helps to achieve these goals and
objectives. This procedure changes with
the growth of the organizational goals
and objectives as business gets involved
in new strategic directions to cope with
various advancements and in the
nuances of globalization.